Fareed Zakaria with Ruchir Sharma head of Emerging Markets and Chief Global Strategist Mogan Stanley – Why is Market Down?

http://transcripts.cnn.com/TRANSCRIPTS/1802/11/fzgps.01.html

  • “Peak Growth” – unemployment rates are at a 40-year low. That just tells you the number of new people we can find to get to work is a lot lower than imagined
    • importance of demographics has still not been internalized by people
    • global economy grew at a pace of nearly 4 percent between 1950 and 2008 – most people use that as a sort of reference number
      • a sort of anchoring biased. That’s what the global economy should be growing at. The U.S. economy should be growing at 3 percent to 4 percent
    • we’re forgetting is that that was the only time in history that the global economy grew at such a robust pace, and the single most important reason for that was we had a massive surge in population across the world like never before
    • two drivers of economic growth.
      • One is increase in productivity,
      • and two is the increase in world’s labor force
    • increase in the world’s labor force between 1950 and 2005 was exceptional and that has come to an end
      • that big demographic surge has come to an end and yet we want to keep harking back to the sort of growth rates that we had in that golden era
  • valuations of tech companies are just staggering
    • Apple’s valuation and market capitalization is larger than the entire country of Italy
    • market cap of Mexico is now smaller than the market cap of Google
  •  irresponsible is that in the ninth year of an economic expansion, you should be running such a large budget deficit. I think that, I think, is the real problem, which is the fact that if you will not run a budget surplus now, then when will you ever run a budget surplus?
    • Keynes would have said in good times you run surpluses and in bad times you run deficits, not that you run deficits permanently

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